MLC started working with MSA in 1986 after the industry was struck with a massive tax increase due to the association’s prior lack of representation at the Capitol. Since that time, MSA has developed an effective voice for its members through active lobbying and daily monitoring of both regulatory and legislative issues.
In the late 2000s, the industry was the target of a potential initiative to increase taxes on spirits products, as the state sought out new revenue streams. In order for the industry to prevent a tax increase, MSA turned to MLC to help develop a strategy to create revenue for the state by increasing sales and negate the need for a tax increase.
Nearly 70 percent of the cost of a bottle of spirits is tax. As the product is already so highly taxed, the suggested increase would likely have an adverse effect, reducing sales and thus reducing the revenue potential for the state.
The idea of sampling at retail had come up in conversation at MSA a few times over the years, a strategy that had been successful in 18 other states. This effort, if implemented, could bring Michigan millions of dollars of new revenue as consumers will be able to sample more expensive products and encourage purchase of higher end spirits. In 2008, MLC saw the opportunity and drove the strategic plan to move forward.
MLC helped develop a legislative agenda that outlined the benefits of allowing the sampling of spirits at select retailers with responsible oversight. This was a controversial and concerning subject to some in the Capitol. However, this was overcome by establishing extensive oversight suggested by MLC and use of case histories based on other states that have legalized such efforts.
As soon as the bill made it in front of legislators, there was a significant positive shift in the conversation. MLC laid the groundwork with the governor’s office to introduce the ideas, spoke with key stakeholders in the state legislature and convinced fiscal agency directors of the massive revenue potential. Considerable time also was spent with industry aligned trade organizations, which led to adjusting the legislation to reflect their concerns on the size of the samples. Once the smaller sample sizes were set, the bill was passed.
Since the bill passed, the industry has been growing at a rapid rate of more than five percent per year. MSA member companies hired hundreds of employees for the sampling initiative, creating additional job opportunities within the industry.
Added revenue to the state reached the tens of millions and is solely attributable to this effort. This exceeded expectations set forth before passage of the bill. Now that consumers are allowed to sample spirits at retail, they are more likely to buy these higher end products, therefore increasing state revenue through the heavily taxed spirits.
Once the spirits industry in Michigan was able to get this bill passed, the beer and wine industry in Michigan followed. MLC set the stage. For more information on how MLC can help you tackle your challenges, contact us today.